New Update for December 27
After a federal appellate court restored the Corporate Transparency Act on December 23, a separate panel of Fifth Circuit judges weighed in late on December 26. While the procedural history of the case has become quite complicated, the practical result is simple: the obligation to file Beneficial Ownership Information reports with FinCEN is once again on pause.
Because this change comes a mere 72 hours after our last guidance, we are including the full text of our recent client alert below. [Note, however, that some information in that alert is now outdated.] Given the continuing confusion of conflicting court rulings, it is possible the guidance below could spring back to relevance.
For now, those who have not yet filed can simply stay tuned for more information. If the obligation to file is ultimately restored, we presume FinCEN would honor the previously communicated extension through at least January 13.
Original Text of December 24 Alert
We have reached out several times over the year regarding ever-changing requirements under the Corporate Transparency Act (CTA). Unfortunately, the drama continues right through the end of the year, with an important court ruling issued just last night. In short: the requirement to file beneficial ownership information (BOI) reports is back on.
If you have already filed your BOI report(s), you can stop reading here and go enjoy the holiday season! (Though keep in mind the CTA’s ongoing reporting requirements for updated ownership information, addresses, etc.)
BACKGROUND
For a refresher on the basics of the CTA, refer to THK’s earlier client alert and FAQs. While there are some limited exemptions, the law requires the vast majority of business entities — and those who own/control those corporations, LLCs, etc. — to file BOI reports by December 31.
On December 3, a federal district court issued a nationwide injunction halting the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) from enforcing the CTA, effectively suspending the reporting requirement. On December 23, the Fifth Circuit Court of Appeals overturned that injunction. The law is now back in effect, with a year-end deadline looming large.
NEW DEADLINES
A few hours after the court ruling, FinCEN issued an alert regarding filing deadlines. Presumably in acknowledgment of the holidays, FinCEN is providing a temporary reprieve for reporters who have not yet filed.
- Companies created prior to January 1, 2024 have until January 13, 2025.
- Companies created between January 1, 2024 and September 3, 2024 were required to file prior to the December 3 injunction, so no extension applies.
- Companies created between September 4, 2024 and September 23, 2024 (i.e., their 90-day filing deadline was affected by the December 3 injunction) have until January 13, 2025.
- Companies created between September 23, 2024 and December 3, 2024 should still use their original 90-day filing deadline.
- Companies created between December 3, 2024 and December 23, 2024 are provided an additional 21 days from their original filing deadline.
ACTION ITEMS
For most who have not yet filed a BOI report, we advise checking back in the first week of January. Though the actual process of filing a report takes only a few minutes, it would be helpful to gather all the required information in advance. Being prepared to file allows those hoping to avoid disclosing the information an opportunity to wait until the last minute for a potential reprieve.
Please stay tuned for further updates, and do not hesitate to reach out with questions. While THK is unable to directly file BOI reports on your behalf, our attorneys are available to provide guidance on filing and interpreting your company’s obligations. Filing is accomplished online at https://www.fincen.gov/boi, and FinCEN’s website includes a Compliance Guide with FAQs.
FUTURE POSSIBILITIES
While the hastily issued alert on FinCEN’s website is not a formal regulation, it seems unlikely the government would later withdraw this extension. So it seems safe to sit tight through the holidays and revisit the issue after January 1.
There is a theoretical possibility the Supreme Court could consider an emergency request and change the CTA’s status once more, but that also seems unlikely at this late hour.
The extended reporting deadline expires before the presidential transition, so there is unlikely to be a change in FinCEN’s enforcement posture prior to the deadline. And, while a new administration may bring a different perspective regarding enforcement, the main requirements of the CTA are statutory law. So a full repeal of the CTA would require an act of Congress.
In summary, while THK will continue to closely monitor this issue, required reporters should be prepared to file BOI reports by January 13.
